Item 4.01. Changes in Registrant’s Certifying Accountant.
(a)(1) Effective June 16, 2023 (the “Dismissal Date”), the Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”) of Skillz Inc. (the “Company,” “we” or “our”) dismissed Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm.
The audit reports of EY on the Company’s consolidated financial statements for the fiscal years ended December 31, 2022 and December 31, 2021, did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except the December 31, 2022 EY report included an explanatory paragraph related to the restatement of the 2021 and 2020 financial statements.
During the fiscal years ended December 31, 2022 and December 31, 2021, and the subsequent interim period through the Dismissal Date, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and EY on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of EY, would have caused it to make reference thereto in its audit reports on the financial statements of the Company for such years.
During the fiscal years ended December 31, 2022 and December 31, 2021, and through June 16, 2023, there were no “reportable events” as defined under Item 304(a)(1)(v) of Regulation S-K, except with respect to (1) the disclosure of material weaknesses in internal control over financial reporting, which all remain unremediated as of December 31, 2022, related to (i) risk assessment, in which our risk management process: (a) did not adequately identify financial statement risks related to the Company’s exposure to indirect taxes that impacted the indirect tax liability in our consolidated balance sheets and resulted in a restatement of our previously issued consolidated financial statements, and (b) did not timely identify third party service organizations on which we rely that were not planning to issue System Organization Controls (“SOC”) reports, or issued SOC reports with qualified opinions, (ii) information technology general controls, in which we did not maintain sufficient: (a) user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel, and (b) program change management controls to ensure that information technology program and data changes affecting financial information technology applications and underlying records are identified, tested, authorized, and implemented appropriately, and (iii) internal control over accounting processes, in which our controls designed to properly evaluate certain accounting processes, including where management review was involved, did not operate effectively due to the lack of sufficient documentation or evidence retained to demonstrate management’s review, and (2) the Company’s: (i) restatement of its Consolidated Balance Sheet as of December 31, 2021, and the related Consolidated Statements of Operations and Comprehensive Loss, Changes in Stockholders’ Equity, and Consolidated Statements of Cash Flows for the year ended December 31, 2021, (ii) restatement of its Unaudited Quarterly Financial Data for the three quarters of the year ended December 31, 2022, (iii) restatement of its Unaudited Quarterly Financial Data for each quarter of the year ended December 31, 2021, and (iv) amendment of its Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2021, all of which restatements and amendments have been included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The above reportable events were discussed between the Audit Committee and EY, and EY has been authorized by the Company to respond fully to inquiries by Grant Thornton LLP (“GT”), the successor registered public accounting firm of the Company, concerning the reportable events.
The Company provided EY with a copy of the foregoing disclosures it is making herein in response to Item 304(a) of Regulation S-K and requested that EY furnish the Company with a copy of their letter addressed to the SEC pursuant to Item 304(a)(3) of Regulation S-K, stating whether EY agrees with the statements made by the Company in this Current Report on Form 8-K in response to Item 304(a) of Regulation S-K. A copy of EY’s letter to the SEC dated June 16, 2023 is attached as Exhibit 16.1 to this Current Report on Form 8-K.
(a)(2) Also on June 16, 2023, the Audit Committee, based on management’s recommendation, approved the selection of GT, effective immediately, as the Company’s new independent registered public accounting firm for the Company’s fiscal year ending December 31, 2023.
During the fiscal years ended December 31, 2022 and December 31, 2021, and through June 16, 2023, neither the Company, nor anyone on its behalf, consulted GT regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the financial statements of the Company and neither a written report nor oral advice was provided to the Company that GT concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).